David Cameron speaks to the Commons about suspending collective cabinet responsibility over the EU referendum.
Photograph: PA

David Cameron was forced to announce early that ministers will be given free rein to campaign on either side in the EU referendum after a manoeuvre by hardline Eurosceptic cabinet ministers.

Chris Grayling and Theresa Villiers, who are planning to join Iain Duncan Smith in campaigning to leave the EU, told the prime minister on Monday that he should clarify the position that ministers will be able to take during the campaign.

In a meeting in Downing Street, Grayling is understood to have argued that the referendum is a matter of such vital importance that voters should hear both sides of the argument from ministers.

Grayling, the leader of the Commons, also called for ministers to be allowed to campaign on either side from the moment the prime minister concludes the negotiations in Europe, rather than having to wait for the short period of the formal campaign. Grayling was pleased when Cameron conceded the point to the veteran Eurosceptic Tory MP Peter Bone in a Commons debate on Europe.

Villiers, the Northern Ireland secretary who is a leading member of the Thatcherite Bruges Group, delivered a similar message to the prime minister on Monday in a telephone call.

Leading Eurosceptic Tories said the interventions by cabinet ministers explained why Cameron finally confirmed the worst-kept secret at Westminster by saying he would suspend collective cabinet responsibility and allow ministers to campaign for a British exit from the EU.

In a statement to MPs on last month’s EU summit, Cameron said: “My intention is that at the conclusion of the renegotiation, the government should reach a clear recommendation and then the referendum will be held. It is the nature of a referendum that it is the people, not the politicians, who decide.

“And, as indicated before Christmas, there will be a clear government position, but it will be open to individual ministers to take a different personal position while remaining part of the government.”

Downing Street played down the interventions by denying claims that Grayling and Villiers had threatened to resign unless the prime minister acted. A Downing Street source said: “The prime minister has been giving private reassurances to cabinet ministers who have been to see him in recent weeks. He is happy to give others those reassurances. The idea that he was bounced into making the statement is fanciful.”

Downing Street made clear that ministers would be expected to support the EU negotiations until they were completed, possibly at the EU summit next month. The prime minister told MPs that he believed there was now a “pathway” to a Brussels deal and he hoped to reach agreement in February. But he indicated that it could take longer.

The prime minister said: “We don’t know when the deal will be done; I hope February, but it could take considerably longer. When you are negotiating with 27 other countries, all sorts of things can happen.”

Cameron said the campaign should last longer than the month-long one for the 1975 referendum and the three-month campaign on electoral reform in 2011. Ministers are working on the basis that the referendum could not be held until at least four months after the conclusion of the negotiations.

The prime minister also insisted that he would continue to lead the government regardless of the result of the vote. He said: “Our aim to set forward a choice for the British people that they want. And they can either choose to stay in a reformed European Union, or to leave a European Union. And, come what may, I will continue to lead the government in the way I have.”

The prime minister’s remarks were seen as a warning to Eurosceptic Tories who are planning to demand his resignation if he loses the referendum that they will face a battle to remove him. Eurosceptics believe he is following the tactics he adopted in the Scottish referendum: to neutralise questions about his future while privately drawing up plans to resign in the event of a defeat.

Authoritative sources told the Guardian that Duncan Smith, Grayling and Villiers will campaign to leave the EU. Duncan Smith will not show his hand until the EU negotiations have been completed because he is a member of the cabinet committee overseeing them.

Theresa May, the home secretary, will decide which side to support once the negotiations have been completed. In her speech to the Tory conference, May appeared to be leaning to the leave side though ministers believe that would be a difficult position to sustain given her support for EU criminal justice cooperation.

London mayor Boris Johnson said he too would make up his mind once the negotiations have been completed. There is a growing belief that Michael Gove, the justice secretary, will set aside his strong reservations about the EU to support the prime minister.

The prime minister’s decision will pose a dilemma for Sajid Javid, the business secretary. Friends regard him as on the leave side but he may be wary of parting company with his patron George Osborne.

The pressure on Javid, who would have been able to say he was campaigning to stay in the EU to maintain cabinet unity if collective responsibility had not been suspended, is understood to explain why George Osborne was so wary of Cameron’s action.

The prime minister and the chancellor want to campaign to keep Britain in the EU, a point Cameron signalled when he spoke of how he can see a “pathway” to an agreement. In private they believe that Britain’s role on the world stage would be diminished by an exit and they also know, though they will not admit, that they would both be severely wounded if they lost the referendum or were forced to recommend a leave vote after a failure in the negotiations.

The former chancellor Kenneth Clarke criticised Cameron for his decision to suspend collective cabinet responsibility, likening him to John Major and Jeremy Corbyn. Clarke, who was a member of Major’s cabinet when the then prime minister railed against Eurosceptic “bastards”, said Cameron was repeating the mistake of appeasing opponents. Clarke also said Cameron would suffer the same fate as Corbyn, who is in open disagreement with key shadow cabinet figures.

Clarke told the World at One on BBC Radio 4: “It is just like John Major, who tried to put people in the cabinet to get them to be more loyal [and] found that it didn’t work – they all briefed against him and were openly disloyal. David has had to come to this position and it is up to the Eurosceptics now to demonstrate they are going to behave in a respectable and sensible way. There is such a thing as the national interest.”